Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2018shares | |
Document Information | |
Entity Registrant Name | ASTRONICS CORP |
Trading Symbol | ATRO |
Entity Central Index Key | 8,063 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2018 |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
Common Class Undefined | |
Document Information | |
Entity Common Stock, Shares Outstanding | 21,543,627 |
Convertible Class B Stock | |
Document Information | |
Entity Common Stock, Shares Outstanding | 6,557,871 |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and Cash Equivalents | $ 10,608 | $ 17,914 |
Accounts Receivable, Net of Allowance for Doubtful Accounts | 169,496 | 132,633 |
Inventories | 159,479 | 150,196 |
Prepaid Expenses and Other Current Assets | 13,912 | 14,586 |
Total Current Assets | 353,495 | 315,329 |
Property, Plant and Equipment, Net of Accumulated Depreciation | 124,696 | 125,830 |
Other Assets | 18,451 | 15,659 |
Intangible Assets, Net of Accumulated Amortization | 142,544 | 153,493 |
Goodwill | 125,237 | 125,645 |
Total Assets | 764,423 | 735,956 |
Current Liabilities: | ||
Current Maturities of Long-term Debt | 2,190 | 2,689 |
Accounts Payable | 49,580 | 41,846 |
Accrued Expenses and Other Current Liabilities | 38,590 | 38,749 |
Customer Advance Payments and Deferred Revenue | 25,429 | 19,607 |
Total Current Liabilities | 115,789 | 102,891 |
Long-term Debt | 263,155 | 269,078 |
Other Liabilities | 34,189 | 34,060 |
Total Liabilities | 413,133 | 406,029 |
Shareholders’ Equity: | ||
Common Stock | 298 | 297 |
Accumulated Other Comprehensive Loss | (15,867) | (13,352) |
Other Shareholders’ Equity | 366,859 | 342,982 |
Total Shareholders’ Equity | 351,290 | 329,927 |
Total Liabilities and Shareholders’ Equity | $ 764,423 | $ 735,956 |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Income Statement [Abstract] | ||||
Revenues | $ 208,606 | $ 151,114 | $ 387,665 | $ 303,510 |
Cost of Products Sold | 159,034 | 116,964 | 300,961 | 231,043 |
Gross Profit | 49,572 | 34,150 | 86,704 | 72,467 |
Selling, General and Administrative Expenses | 29,443 | 22,091 | 59,943 | 43,474 |
Income from Operations | 20,129 | 12,059 | 26,761 | 28,993 |
Other Expense, Net of Other Income | 463 | 310 | 838 | 620 |
Interest Expense, Net of Interest Income | 2,484 | 1,180 | 4,815 | 2,313 |
Income Before Income Taxes | 17,182 | 10,569 | 21,108 | 26,060 |
Provision for Income Taxes | 3,157 | 2,884 | 3,789 | 6,788 |
Net Income | $ 14,025 | $ 7,685 | $ 17,319 | $ 19,272 |
Earnings Per Share: | ||||
Basic (in usd per share) | $ 0.50 | $ 0.27 | $ 0.62 | $ 0.66 |
Diluted (in usd per share) | $ 0.49 | $ 0.26 | $ 0.60 | $ 0.64 |
Consolidated Condensed Stateme4
Consolidated Condensed Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 14,025 | $ 7,685 | $ 17,319 | $ 19,272 |
Other Comprehensive (Loss) Income: | ||||
Foreign Currency Translation Adjustments | (1,805) | 2,096 | (1,572) | 2,491 |
Retirement Liability Adjustment – Net of Tax | 215 | 131 | 430 | 262 |
Total Other Comprehensive (Loss) Income | (1,590) | 2,227 | (1,142) | 2,753 |
Comprehensive Income | $ 12,435 | $ 9,912 | $ 16,177 | $ 22,025 |
Consolidated Condensed Stateme5
Consolidated Condensed Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Cash Flows From Operating Activities: | ||
Net Income | $ 17,319 | $ 19,272 |
Adjustments to Reconcile Net Income to Cash Provided By Operating Activities: | ||
Depreciation and Amortization | 18,584 | 12,587 |
Provisions for Non-Cash Losses on Inventory and Receivables | 1,819 | 918 |
Stock Compensation Expense | 1,637 | 1,456 |
Deferred Tax Benefit | (516) | (536) |
Other | (431) | (804) |
Cash Flows from Changes in Operating Assets and Liabilities: | ||
Accounts Receivable | (33,347) | (7,076) |
Inventories | (19,761) | (10,453) |
Accounts Payable | 7,981 | 3,349 |
Accrued Expenses | 53 | (7,106) |
Other Current Assets and Liabilities | (404) | (2,668) |
Customer Advanced Payments and Deferred Revenue | 14,469 | (4,143) |
Income Taxes | (189) | (1,028) |
Supplemental Retirement and Other Liabilities | 896 | 758 |
Cash Provided By Operating Activities | 8,110 | 4,526 |
Cash Flows From Investing Activities: | ||
Acquisition of Business, Net of Cash Acquired | 0 | 10,223 |
Capital Expenditures | (8,495) | (5,750) |
Other Investing Activities | 0 | (186) |
Cash Used For Investing Activities | (8,495) | (15,787) |
Cash Flows From Financing Activities: | ||
Proceeds from Long-term Debt | 30,015 | 22,000 |
Payments for Long-term Debt | (36,416) | (7,341) |
Purchase of Outstanding Shares for Treasury | 0 | (13,524) |
Debt Acquisition Costs | (516) | 0 |
Proceeds from Exercise of Stock Options | 281 | 317 |
Cash (Used For) Provided By Financing Activities | (6,636) | 1,452 |
Effect of Exchange Rates on Cash | (285) | 176 |
Decrease in Cash and Cash Equivalents | (7,306) | (9,633) |
Cash and Cash Equivalents at Beginning of Period | 17,914 | 17,901 |
Cash and Cash Equivalents at End of Period | $ 10,608 | $ 8,268 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Operating Results The results of operations for any interim period are not necessarily indicative of results for the full year. Operating results for the six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 . The balance sheet at December 31, 2017 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in Astronics Corporation’s 2017 annual report on Form 10-K. Description of the Business Astronics Corporation (“Astronics” or the “Company”) is a leading provider of advanced technologies to the global aerospace, defense, electronics and semiconductor industries. Our products and services include advanced, high-performance electrical power generation, distribution and motion systems, lighting and safety systems, avionics products, systems and certification, aircraft structures and automated test systems. We have operations in the United States (“U.S.”), Canada and France. We design and build our products through our wholly owned subsidiaries Astronics Advanced Electronic Systems Corp. (“AES”); Astronics AeroSat Corporation (“AeroSat”); Armstrong Aerospace, Inc. (“Armstrong”); Astronics Test Systems, Inc. (“ATS”); Ballard Technology, Inc. (“Ballard”); Astronics Connectivity Systems and Certification Corp. (“CSC”); Astronics Custom Control Concepts Inc. (“CCC”); Astronics DME LLC (“DME”); Luminescent Systems, Inc. (“LSI”); Luminescent Systems Canada, Inc. (“LSI Canada”); Max-Viz, Inc. (“Max-Viz”); Peco, Inc. (“Peco”); and PGA Electronic s.a. (“PGA”). On April 3, 2017, Astronics Custom Control Concepts Inc., a wholly owned subsidiary of the Company acquired substantially all the assets and certain liabilities of Custom Control Concepts LLC, located in Kent, Washington. CCC is a provider of cabin management and in-flight entertainment systems for a range of aircraft. CCC is included in our Aerospace segment. On December 1, 2017, Astronics acquired substantially all of the assets of Telefonix Inc. and a related company, Product Development Technologies, LLC and its subsidiaries, to become CSC, primarily located in Waukegan and Lake Zurich, Illinois. CSC designs and manufactures advanced in-flight entertainment and connectivity equipment, and provides industry leading design consultancy services for the global aerospace industry. CSC is included in our Aerospace Segment. For additional information regarding these acquisitions see Note 18. Cost of Products Sold, Engineering and Development and Selling, General and Administrative Expenses Cost of products sold includes the costs to manufacture products such as direct materials and labor and manufacturing overhead as well as all engineering and development costs. The Company is engaged in a variety of engineering and design activities as well as basic research and development activities directed to the substantial improvement or new application of the Company’s existing technologies. These costs are expensed when incurred and included in cost of products sold. Research and development, design and related engineering amounted to $28.9 million and $23.0 million for the three months ended and $57.8 million and $45.8 million for the six months ended June 30, 2018 and July 1, 2017 , respectively. Selling, general and administrative expenses include costs primarily related to our sales and marketing departments and administrative departments. Interest expense is shown net of interest income. Interest income was insignificant for the three and six months ended June 30, 2018 and July 1, 2017 . Foreign Currency Translation The aggregate transaction gain or loss included in operations was insignificant for the three and six months ended June 30, 2018 and July 1, 2017 . Precontract Costs The Company may, from time to time, incur costs in excess of the amounts required for existing contracts. If it is determined the costs are probable of recovery from future orders, the precontract costs incurred are capitalized, excluding start-up costs which are expensed as incurred. Capitalized precontract costs are included in Inventories in the accompanying Consolidated Balance Sheets. Should future orders not materialize or it is determined the costs are no longer probable of recovery, the capitalized costs are written off. Included in inventories at June 30, 2018 are capitalized precontract costs of $9.5 million . Newly Adopted and Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), that, together with several subsequent updates, outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. ASU 2014-09 is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also provides for enhanced disclosure requirements surrounding revenue recognition. Prior to the adoption of ASU 2014-09, revenue on a significant portion of our contracts had been recognized at the time of shipment of goods, transfer of title and customer acceptance, as required. Our revenue transactions generally consist of a single performance obligation to transfer promised goods and are not accounted for under industry-specific guidance. We have retained much of the same accounting treatment used to recognize revenue under the prior standard. However, the adoption of ASU 2014-09 required us to accelerate the recognition of revenue as compared to the prior standard for certain customers, in cases where we produce products unique to those customers, and for which we would have an enforceable right of payment, inclusive of profit, for production completed to date. We adopted ASU 2014-09 on January 1, 2018 using the modified retrospective method, which required the recognition of the cumulative effect of the transition as an adjustment to retained earnings. The Company elected to apply the standard only to open contracts as of January 1, 2018. Based on the application of the changes described above, we recognized a transition adjustment of $3.3 million , net of tax effects, which increased our January 1, 2018 retained earnings. Based on our existing operations, ASU 2014-09 is not expected to have a material impact to net earnings for the year ended December 31, 2018. Refer to Note 2 for additional information. During the first quarter of 2018, the Company early-adopted ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which allows for a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The Company applied the guidance as of the beginning of the period of adoption and reclassified approximately $1.4 million from accumulated other comprehensive loss to retained earnings due to the change in federal corporate tax rate. In February 2016, the FASB issued ASU No. 2016-02, Leases . The new standard is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The standard will require lessees to report most leases as assets and liabilities on the balance sheet, while lessor accounting will remain substantially unchanged. The standard requires a modified retrospective transition approach for existing leases, whereby the new rules will be applied to the earliest year presented. The Company is currently evaluating the impact of ASU 2016-02 on our financial statements. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other Than Inventory , which requires entities to recognize income tax consequences of intra-entity transfers of assets, other than inventory, when the transfer occurs rather than when the asset is sold to a third party as is the case under current GAAP. The Company adopted ASU 2016-16 effective January 1, 2018, and such adoption did not have a material impact on the consolidated financial statements In January 2017, the FASB issued ASU No. 2017-01, Clarifying the Definition of a Business , which narrows the existing definition of a business and provides a framework for evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or a business. The ASU requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities (collectively, the set) is not a business. To be considered a business, the set would need to include an input and a substantive process that together significantly contribute to the ability to create outputs. The standard also narrows the definition of outputs. The definition of a business affects areas of accounting such as acquisitions, disposals and goodwill. Under the new guidance, fewer acquired sets are expected to be considered businesses. The Company adopted ASU 2017-01 effective January 1, 2018. The Company will apply this guidance to applicable transactions after the adoption date on a prospective basis. No applicable transactions have occurred as of June 30, 2018 . In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . This ASU changes how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the net periodic benefit cost in the income statement. This ASU was adopted as of January 1, 2018 on a retrospective basis. Under the new standard, only the service cost component of net periodic benefit cost would be included in operating expenses. All other net periodic benefit costs components (such as interest cost, prior service cost amortization and actuarial gain/loss amortization) would be reported outside of operating income. These include components totaling $0.5 million and $0.4 million for the three months ended and $1.0 million and $0.9 million for the six months ended June 30, 2018 and July 1, 2017 , respectively, that no longer are included within Selling, General and Administrative Expenses and instead are reported outside of income from operations, within Other Expense, Net of Other Income in our Consolidated Statements of Operations. In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting , that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as a modification. The general model for accounting for modifications of share-based payment awards is to record the incremental value arising from the changes as additional compensation cost. Under the new standard, fewer changes to the terms of an award would require accounting under this modification model. This ASU was adopted as of January 1, 2018. As the Company has not made changes to the terms or conditions of its issued share-based payment awards, this ASU had no impact on our consolidated results of operations and financial condition. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue As discussed in Note 1, ASU 2014-09 was adopted on January 1, 2018 using the modified retrospective method, which required the recognition of the cumulative effect of the transition as an adjustment to retained earnings. Revenue is recognized when, or as, the Company transfers control of promised products or services to a customer in an amount that reflects the consideration the Company expects to be entitled in exchange for transferring those products or service. Payment terms and conditions vary by contract, although terms generally include a requirement of payment within a range from 30 to 60 days, or in certain cases, up-front deposits. In circumstances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that the Company's contracts generally do not include a significant financing component. Taxes collected from customers, which are subsequently remitted to governmental authorities, are excluded from sales. The Company recognizes an asset for the incremental, material costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year and the costs are expected to be recovered. As of June 30, 2018 , the Company does not have such incremental, material costs on any open contracts with an original expected duration of greater than one year, and therefore such costs are expensed as incurred. These incremental costs include, but are not limited to, sales commissions incurred to obtain a contract with a customer. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts which are, therefore, not distinct. Promised goods or services that are immaterial in the context of the contract are not separately assessed as performance obligations. Some of our contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the product lifecycle (development, production, maintenance and support). For contracts with multiple performance obligations, the contract’s transaction price is allocated to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which expected costs are forecast to satisfy a performance obligation and then an appropriate margin is added for that distinct good or service. Shipping and handling activities that occur after the customer has obtained control of the good are considered fulfillment activities, not performance obligations. Some of our contracts offer price discounts or free units after a specified volume has been purchased. The Company evaluates these options to determine whether they provide a material right to the customer, or represent a separate performance obligation. If the option provides a material right to the customer, revenue is allocated to these rights and recognized when those future goods or services are transferred, or when the option expires. Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract. The aggregate effect of all modifications as of the period beginning January 1, 2018 has been reflected when identifying the satisfied and unsatisfied performance obligations, determining the transaction price and allocating the transaction price. Contracts modified prior to January 1, 2018 have not been retrospectively restated. The vast majority of the Company’s revenue from contracts with customers is recognized at a point in time, when the customer obtains control of the promised product, which is generally upon delivery and acceptance by the customer. These contracts may provide credits or incentives, which may be accounted for as variable consideration. Variable consideration is estimated at the most likely amount to predict the consideration to which the Company will be entitled, and only to the extent it is probable that a subsequent change in estimate will not result in a significant revenue reversal when estimating the amount of revenue to recognize. Variable consideration is treated as a change to the sales transaction price and based on an assessment of all information (i.e., historical, current and forecasted) that is reasonably available to the Company, and estimated at contract inception and updated at the end of each reporting period as additional information becomes available. Most of our contracts do not contain rights to return product; where this right does exist, it is evaluated as possible variable consideration. For contracts with customers in which the Company satisfies a promise to the customer to provide a product that has no alternative use to the Company and the Company has enforceable rights to payment for progress completed to date inclusive of profit, the Company satisfies the performance obligation and recognizes revenue over time, using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material and overhead. The Company also recognizes revenue from service contracts (including service-type warranties) over time. The Company recognizes revenue over time during the term of the agreement as the customer is simultaneously receiving and consuming the benefits provided throughout the Company’s performance. Therefore, due to control transferring over time, the Company typically recognizes revenue on a straight-line basis throughout the contract period. On June 30, 2018 , we had $376.9 million of remaining performance obligations, which we refer to as total backlog. We expect to recognize approximately $309.1 million of our remaining performance obligations as revenue in 2018 . We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09, were as follows (in thousands): Balance Sheet Balance at December 31, 2017 Adjustments Due to ASU 2014-09 Balance at January 1, 2018 Assets Accounts Receivable, Net of Allowance for Doubtful Accounts $ 132,633 $ 4,005 $ 136,638 Inventories $ 150,196 $ (7,957 ) $ 142,239 Liabilities Accrued Income Taxes $ 261 $ 1,028 $ 1,289 Customer Advance Payments and Deferred Revenue $ 19,607 $ (8,176 ) $ 11,431 Deferred Income Taxes $ 5,121 $ (72 ) $ 5,049 Equity Retained Earnings $ 325,191 $ 3,268 $ 328,459 In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated income statement and balance sheet was as follows (in thousands): For the Six Months Ended June 30, 2018 For the Three Months Ended June 30, 2018 Income Statement As Reported Effect of Change Higher/(Lower) Balances Without Adoption of ASU 2014-09 As Reported Effect of Change Higher/(Lower) Balances Without Adoption of ASU 2014-09 Revenues Aerospace $ 330,804 $ (771 ) $ 331,575 $ 166,204 $ (1,429 ) $ 167,633 Test Systems $ 56,861 $ (575 ) $ 57,436 $ 42,402 $ (2,536 ) $ 44,938 Costs and Expenses Cost of Products Sold $ 300,961 $ (1,467 ) $ 302,428 $ 159,034 $ (2,814 ) $ 161,848 Provision for Income Taxes $ 3,789 $ 21 $ 3,768 $ 3,157 $ (272 ) $ 3,429 Net Income $ 17,319 $ 100 $ 17,219 $ 14,025 $ (879 ) $ 14,904 June 30, 2018 Balance Sheet As Reported Effect of Change Higher/(Lower) Balances Without Adoption of ASU 2014-09 Assets Accounts Receivable, Net of Allowance for Doubtful Accounts $ 169,496 $ 6,330 $ 163,166 Inventories $ 159,479 $ (6,490 ) $ 165,969 Liabilities Accrued Expenses and Other Current Liabilities $ 38,590 $ 1,295 $ 37,295 Customer Advance Payments and Deferred Revenue $ 25,429 $ (4,505 ) $ 29,934 Other Liabilities $ 34,189 $ (318 ) $ 34,507 Equity Other Shareholders' Equity $ 366,859 $ 3,368 $ 363,491 Costs in excess of billings includes unbilled amounts resulting from revenues under contracts with customers that are satisfied over time and when the cost-to-cost measurement method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Costs in excess of billings are classified as current assets, within Accounts Receivable, Net of Allowance for Doubtful Accounts on our Consolidated Balance Sheet. Billings in excess of cost includes billings in excess of revenue recognized as well as deferred revenue, which includes advanced payments, up-front payments, and progress billing payments. Billings in excess of cost are classified as current liabilities, reported in our Consolidated Balance Sheet within Customer Advance Payments and Deferred Revenue. To determine the revenue recognized in the period from the beginning balance of billings in excess of cost, the contract liability as of the beginning of the period is recognized as revenue on a contract-by-contract basis when the Company incurs costs to satisfy the performance obligation related to the individual contract. Once the beginning contract liability balance for an individual contract has been fully recognized as revenue, any additional payments received in the period are recognized as revenue once the related costs have been incurred. During the three months ended and six months ended June 30, 2018, we recognized $8.4 million and $11.6 million , respectively, in revenues that were included in the contract liability balance at the adoption date. The Company's contract assets and contract liabilities consist of costs in excess of billings and billings in excess of cost, respectively. The following table presents the beginning and ending balances of contract assets and contract liabilities during the six months ended June 30, 2018 (in thousands): Contract Assets Contract Liabilities Beginning Balance, January 1, 2018 (1) $ 24,423 $ 11,431 Ending Balance, June 30, 2018 $ 20,672 $ 25,429 (1) Due to the adoption of ASU 2014-09 effective January 1, 2018, the Company recorded a transition adjustment to the opening balance of Contract Assets and Contract Liabilities at January 1, 2018. Refer to the cumulative effect of the changes table above for further explanation of the changes made to our consolidated January 1, 2018 balance sheet. The following table presents our revenue disaggregated by Market Segments (in thousands): Six Months Ended Three Months Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Aerospace Segment Commercial Transport $ 265,847 $ 208,079 $ 132,797 $ 98,355 Military 30,285 30,931 16,270 15,785 Business Jet 21,002 18,251 10,338 10,716 Other 13,670 9,113 6,799 4,691 Aerospace Total 330,804 266,374 166,204 129,547 Test Systems Segment Semiconductor 38,465 11,711 31,405 7,080 Aerospace & Defense 18,396 25,425 10,997 14,487 Test Systems Total 56,861 37,136 42,402 21,567 Total $ 387,665 $ 303,510 $ 208,606 $ 151,114 The following table presents our revenue disaggregated by Product Lines (in thousands): Six Months Ended Three Months Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Aerospace Segment Electrical Power & Motion $ 140,321 $ 135,040 $ 67,643 $ 62,597 Lighting & Safety 85,763 85,316 44,121 42,646 Avionics 69,295 20,076 36,272 10,940 Systems Certification 9,655 4,952 4,872 2,793 Structures 12,100 11,877 6,497 5,880 Other 13,670 9,113 6,799 4,691 Aerospace Total 330,804 266,374 166,204 129,547 Test Systems 56,861 37,136 42,402 21,567 Total $ 387,665 $ 303,510 $ 208,606 $ 151,114 |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are as follows: ( In thousands ) June 30, December 31, Finished Goods $ 29,276 $ 35,193 Work in Progress 40,560 33,219 Raw Material 89,643 81,784 $ 159,479 $ 150,196 |
Property, Plant and Equipment
Property, Plant and Equipment | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment The following table summarizes Property, Plant and Equipment as follows: (In thousands) June 30, December 31, Land $ 11,212 $ 11,237 Buildings and Improvements 82,000 81,872 Machinery and Equipment 105,991 105,827 Construction in Progress 8,356 9,761 207,559 208,697 Less Accumulated Depreciation 82,863 82,867 $ 124,696 $ 125,830 |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets The following table summarizes acquired intangible assets as follows: June 30, 2018 December 31, 2017 (In thousands) Weighted Average Life Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Patents 11 Years $ 2,146 $ 1,672 $ 2,146 $ 1,629 Non-compete Agreement 4 Years 10,900 3,184 10,900 1,687 Trade Names 10 Years 11,471 4,648 11,492 4,114 Completed and Unpatented Technology 10 Years 38,078 13,945 38,114 11,931 Backlog 2 Years 14,424 14,424 14,424 12,184 Customer Relationships 15 Years 137,902 34,504 137,967 30,005 Total Intangible Assets 12 Years $ 214,921 $ 72,377 $ 215,043 $ 61,550 All acquired intangible assets other than goodwill and one trade name are being amortized. Amortization expense for acquired intangibles is summarized as follows: Six Months Ended Three Months Ended (In thousands) June 30, July 1, June 30, July 1, Amortization Expense $ 10,868 $ 5,340 $ 4,867 $ 2,722 Amortization expense for acquired intangible assets expected for 2018 and for each of the next five years is summarized as follows: (In thousands) 2018 $ 19,384 2019 16,700 2020 15,975 2021 14,065 2022 13,631 2023 12,463 |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The following table summarizes the changes in the carrying amount of goodwill for the six months ended June 30, 2018 : (In thousands) December 31, Acquisition/Adjustments Foreign Currency Translation June 30, Aerospace $ 125,645 $ (141 ) $ (267 ) $ 125,237 Test Systems — — — — $ 125,645 $ (141 ) $ (267 ) $ 125,237 |
Long-term Debt and Notes Payabl
Long-term Debt and Notes Payable | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-term Debt and Notes Payable | Long-term Debt and Notes Payable The Company's Fourth Amended and Restated Credit Agreement (the “Original Facility”) provided for a $350 million revolving credit line with the option to increase the line by up to $150 million . The maturity date of the Original Facility was January 13, 2021. On February 16, 2018, the Company modified and extended the Original Facility by entering into the Fifth Amended and Restated Credit Agreement (the “Agreement”), which provides for a $500 million revolving credit line with the option to increase the line by up to $150 million . A new lender was added to the facility as well. The outstanding balance of the Original Facility was rolled into the Agreement on the date of closing. The maturity date of the loans under the Agreement is February 16, 2023 . At June 30, 2018 , there was $257.0 million outstanding on the revolving credit facility and there remains $241.9 million available, net of outstanding letters of credit. The credit facility allocates up to $20 million of the $500 million revolving credit line for the issuance of letters of credit, including certain existing letters of credit. At June 30, 2018 , outstanding letters of credit totaled $1.1 million . The maximum permitted leverage ratio of funded debt to Adjusted EBITDA (as defined in the Agreement) is 3.75 to 1, increasing to 4.50 to 1 for up to four fiscal quarters following the closing of an acquisition permitted under the Agreement, subject to limitations. The Company’s leverage ratio was 2.80 to 1 at June 30, 2018 . The Company will pay interest on the unpaid principal amount of the facility at a rate equal to one-, three- or six-month LIBOR plus between 1.00% and 1.50% based upon the Company’s leverage ratio. The Company will also pay a commitment fee to the lenders in an amount equal to between 0.10% and 0.20% on the undrawn portion of the credit facility, based upon the Company’s leverage ratio. The Company’s obligations under the Credit Agreement as amended are jointly and severally guaranteed by each domestic subsidiary of the Company other than a non-material subsidiary. The obligations are secured by a first priority lien on substantially all of the Company’s and the guarantors’ assets. In the event of voluntary or involuntary bankruptcy of the Company or any subsidiary, all unpaid principal and other amounts owing under the Agreement automatically become due and payable. Other events of default, such as failure to make payments as they become due and breach of financial and other covenants, change of control, judgments over a certain amount, and cross default under other agreements give the Agent the option to declare all such amounts immediately due and payable. |
Product Warranties
Product Warranties | 6 Months Ended |
Jun. 30, 2018 | |
Product Warranties Disclosures [Abstract] | |
Product Warranties | Product Warranties In the ordinary course of business, the Company warrants its products against defects in design, materials and workmanship typically over periods ranging from 12 to 60 months . The Company determines warranty reserves needed by product line based on experience and current facts and circumstances. Activity in the warranty accrual is summarized as follows: Six Months Ended Three Months Ended (In thousands) June 30, July 1, June 30, July 1, Balance at Beginning of Period $ 5,136 $ 4,675 $ 5,115 $ 4,357 Acquisitions — 359 — 359 Warranties Issued 1,301 832 734 365 Warranties Settled (1,285 ) (1,224 ) (645 ) (517 ) Reassessed Warranty Exposure 28 (5 ) (24 ) 73 Balance at End of Period $ 5,180 $ 4,637 $ 5,180 $ 4,637 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rates were approximately 18.0% and 26.0% for the six months ended and 18.4% and 27.3% for the three months ended June 30, 2018 and July 1, 2017 , respectively. The 2018 tax rates were favorably impacted relative to the applicable year's statutory rate by the federal research and development tax credit, the impact of which was partially offset by state tax expense. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Act”). The legislation significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Act permanently reduced the U.S. corporate income tax rate from a maximum of 35% to a 21% rate, effective January 1, 2018. While the Tax Cuts and Jobs Act provides for a territorial tax system, beginning in 2018, it includes the foreign-derived intangible income (“FDII”) and global intangible low-taxed income (“GILTI”) provisions. The Company elected to account for GILTI tax in the period in which it is incurred. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The GILTI tax expense resulted from required allocations of interest expense to the GILTI income, which created a U.S. foreign tax credit limitation. The FDII provisions allow for a deduction equal to a percentage of the foreign-derived intangible income of a domestic corporation. As a result of these provisions, net, the Company’s effective tax rate decreased approximately 0.3% and increased approximately 0.2% for the six months and three months ended June 30, 2018 , respectively. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. The Company recognized provisional tax impacts related to the deemed repatriated earnings and the revaluation of deferred tax assets and liabilities in its consolidated financial statements for the year ended December 31, 2017 . During the six months and three months ended June 30, 2018 , the Company did not make any adjustments to its provisional amounts included in its consolidated financial statements for the year ended December 31, 2017 . The company is still obtaining and analyzing historical records and finalizing its calculation of these provisional amounts. The accounting is expected to be completed in the fourth quarter of 2018 after the 2017 U.S. corporate income tax return is filed. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity The changes in shareholders’ equity for the six months ended June 30, 2018 are summarized as follows: Number of Shares (Dollars and Shares in thousands) Amount Common Stock Convertible Class B Stock Shares Authorized 40,000 15,000 Share Par Value $ 0.01 $ 0.01 COMMON STOCK Beginning of Period $ 297 22,861 6,852 Conversion of Class B Shares to Common Shares — 332 (332 ) Exercise of Stock Options 1 26 38 End of Period $ 298 23,219 6,558 ADDITIONAL PAID IN CAPITAL Beginning of Period $ 67,791 Stock Compensation Expense 1,637 Exercise of Stock Options 280 End of Period $ 69,708 ACCUMULATED OTHER COMPREHENSIVE LOSS Beginning of Period $ (13,352 ) Adoption of ASU 2018-02 (1,373 ) Foreign Currency Translation Adjustment (1,572 ) Retirement Liability Adjustment – Net of Tax 430 End of Period $ (15,867 ) RETAINED EARNINGS Beginning of Period $ 325,191 Adoption of ASU 2014-09 3,268 Adoption of ASU 2018-02 1,373 Net Income 17,319 End of Period $ 347,151 TREASURY STOCK Beginning of Period $ (50,000 ) (1,675 ) Purchase — — End of Period $ (50,000 ) (1,675 ) TOTAL SHAREHOLDERS’ EQUITY Beginning of Period $ 329,927 End of Period $ 351,290 21,544 6,558 On February 24, 2016, the Company’s Board of Directors authorized the repurchase of up to $50 million of common stock (the “Buyback Program”). The Buyback Program allowed the Company to purchase shares of its common stock in accordance with applicable securities laws on the open market or through privately negotiated transactions. The Company has repurchased approximately 1,675,000 shares and has completed that program. On December 12, 2017, the Company’s Board of Directors authorized an additional repurchase of up to $50 million . No amounts have been repurchased under the new program as of June 30, 2018 . |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and diluted weighted-average shares outstanding are as follows: Six Months Ended Three Months Ended (In thousands) June 30, July 1, June 30, July 1, Weighted Average Shares - Basic 28,085 29,007 28,098 28,911 Net Effect of Dilutive Stock Options 670 1,128 704 1,178 Weighted Average Shares - Diluted 28,755 30,135 28,802 30,089 Stock options with exercise prices greater than the average market price of the underlying common shares are excluded from the computation of diluted earnings per share because they are out-of-the-money and the effect of their inclusion would be anti-dilutive. The number of common shares covered by out-of-the-money stock options was approximately 139,000 shares as of June 30, 2018 . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss and Other Comprehensive Income | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss and Other Comprehensive Income | Accumulated Other Comprehensive Loss and Other Comprehensive Income The components of accumulated other comprehensive loss are as follows: (In thousands) June 30, December 31, Foreign Currency Translation Adjustments $ (6,037 ) $ (4,465 ) Retirement Liability Adjustment – Before Tax (12,443 ) (12,988 ) Tax Benefit of Retirement Liability Adjustment 3,986 4,101 Adoption of ASU 2018-02 (1,373 ) — Retirement Liability Adjustment – After Tax (9,830 ) (8,887 ) Accumulated Other Comprehensive Loss $ (15,867 ) $ (13,352 ) The components of other comprehensive (loss) income are as follows: Six Months Ended Three Months Ended (In thousands) June 30, July 1, June 30, July 1, Foreign Currency Translation Adjustments $ (1,572 ) $ 2,491 $ (1,805 ) $ 2,096 Retirement Liability Adjustments: Reclassifications to General and Administrative Expense: Amortization of Prior Service Cost 202 202 101 102 Amortization of Net Actuarial Losses 343 201 172 99 Tax Benefit (115 ) (141 ) (58 ) (70 ) Retirement Liability Adjustment 430 262 215 131 Other Comprehensive (Loss) Income $ (1,142 ) $ 2,753 $ (1,590 ) $ 2,227 |
Supplemental Retirement Plan an
Supplemental Retirement Plan and Related Post Retirement Benefits | 6 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Supplemental Retirement Plan and Related Post Retirement Benefits | Supplemental Retirement Plan and Related Post Retirement Benefits The Company has two non-qualified supplemental retirement defined benefit plans (“SERP” and “SERP II”) for certain executive officers. The following table sets forth information regarding the net periodic pension cost for the plans. Six Months Ended Three Months Ended (In thousands) June 30, July 1, June 30, July 1, Service Cost $ 100 $ 92 $ 50 $ 46 Interest Cost 450 448 225 224 Amortization of Prior Service Cost 194 194 97 97 Amortization of Net Actuarial Losses 314 186 157 93 Net Periodic Cost $ 1,058 $ 920 $ 529 $ 460 Participants in the SERP are entitled to paid medical, dental and long-term care insurance benefits upon retirement under the plan. The following table sets forth information regarding the net periodic cost recognized for those benefits: Six Months Ended Three Months Ended (In thousands) June 30, July 1, June 30, July 1, Service Cost $ 8 $ 4 $ 4 $ 2 Interest Cost 23 20 12 10 Amortization of Prior Service Cost 8 8 4 5 Amortization of Net Actuarial Losses 29 15 15 6 Net Periodic Cost $ 68 $ 47 $ 35 $ 23 |
Sales to Major Customers
Sales to Major Customers | 6 Months Ended |
Jun. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
Sales to Major Customers | Sales to Major Customers The Company has a significant concentration of business with two major customers, each in excess of 10% of consolidated sales. The loss of either of these customers would significantly, negatively impact our sales and earnings. Sales to these two customers represented 16% and 15% of consolidated sales for the six months ended and 12% and 14% for the three months ended June 30, 2018 . Sales to these customers were in the Aerospace segment. Accounts receivable from these customers at June 30, 2018 was approximately $31.5 million . Sales to these two customers represented 20% and 18% of consolidated sales for the six months and 16% and 18% for the three months ended July 1, 2017 . |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Legal Proceedings The Company is subject to various legal proceedings, claims, and litigation arising in the ordinary course of business. While the outcome of these matters is currently not determinable, we do not expect these matters will have a material adverse effect on our business, financial position, results of operations, or cash flows. However, the results of these matters cannot be predicted with certainty. Should the Company fail to prevail in any legal matter or should several legal matters be resolved against the Company in the same reporting period, then the financial results of that particular reporting period could be materially adversely affected. On December 29, 2010, Lufthansa Technik AG (“Lufthansa”) filed a Statement of Claim in the Regional State Court of Mannheim, Germany. Lufthansa’s claim asserts that our subsidiary, AES, sold, marketed, and brought into use in Germany a power supply system that infringes upon a German patent held by Lufthansa. Lufthansa sought an order requiring AES to stop selling and marketing the allegedly infringing power supply system, a recall of allegedly infringing products sold to commercial customers in Germany since November 26, 2003, and compensation for damages related to direct sales of the allegedly infringing power supply system in Germany (referred to as “direct sales”). The claim does not specify an estimate of damages and a related damages claim is being pursued by Lufthansa in separate court proceedings in an action filed in July 2017, as further discussed below. In February 2015, the Regional State Court of Mannheim, Germany rendered its decision that the patent was infringed. The judgment does not require AES to recall products that are already installed in aircraft or have been sold to other end users. On July 15, 2015, Lufthansa advised AES of their intention to enforce the accounting provisions of the decision, which required AES to provide certain financial information regarding direct sales of the infringing product in Germany to enable Lufthansa to make an estimate of requested damages. Additionally, if Lufthansa provides the required bank guarantee specified in the decision, the Company may be required to offer a recall of products that are in the distribution channels in Germany. No such bank guarantee has been issued to date. As of June 30, 2018 , there are no products subject to the order in the distribution channels in Germany. The Company appealed to the Higher Regional Court of Karlsruhe. On November 15, 2016, the Court issued its ruling and upheld the lower court’s decision. The Company submitted a petition to grant AES leave for appeal to the German Federal Supreme Court. On April 18, 2018, the German Federal Supreme Court granted Astronics’ petition in part, namely with respect to the part concerning the amount of damages. We estimate that the German Federal Supreme Court will provide its ruling on this issue in late 2018 or in early 2019. In July 2017, Lufthansa filed an action in the Regional State Court of Mannheim for payment of damages caused by the alleged patent infringement of AES, related to direct sales of the allegedly infringing product in Germany (associated with the original December 2010 action discussed above). In this action, which was served on AES on April 11, 2018, Lufthansa claims payment of approximately $6.2 million plus interest. According to AES's assessment, this claim is significantly higher than justified. We estimate AES’s potential exposure to be approximately $1 million to $3 million , and have recorded a reserve of $1 million associated with this matter, which is management's best estimate of the probable exposure. Such amount is recorded within Other Accrued Expenses and Selling, General and Administrative Expenses in the accompanying financial statements as of and for the six month period ended June 30, 2018 . An oral hearing has been scheduled on November 16, 2018. A first instance decision is in this matter is expected in early 2019. On December 29, 2017, Lufthansa filed another infringement action against AES in the Regional State Court of Mannheim claiming that sales by AES to its international customers have infringed Lufthansa's patent if AES's customers later shipped the products to Germany (referred to as "indirect sales"). This action, therefore, addresses sales other than those covered by the action filed on December 29, 2010, discussed above. In this action, served on April 11, 2018, Lufthansa seeks an injunction, an order obliging AES to provide information and accounting and a finding that AES owes damages for the attacked indirect sales. AES will vigorously defend against the action. No amount of claimed damages has been specified by Lufthansa and such amount is not quantifiable at this time. An oral hearing in this matter has been scheduled on March 22, 2019. A first instance decision is in this matter is expected in mid 2019. As loss exposure is neither probable nor estimable at this time, the Company has not recorded any liability with respect to this litigation as of June 30, 2018 . In December 2017, Lufthansa filed patent infringement cases in the United Kingdom and in France against AES. The Lufthansa patent expired in May 2018. In those cases, Lufthansa accuses AES of having manufactured, used, sold and offered for sale a power supply system, and offered and supplied parts for a power supply system, that infringed upon a Lufthansa patent in those respective countries. As loss exposure is neither probable nor estimable at this time, the Company has not recorded any liability with respect to these matters as of June 30, 2018 . On November 26, 2014, Lufthansa filed a complaint in the United States District for the Western District of Washington. Lufthansa’s complaint in that action alleges that AES manufactures, uses, sells and offers for sale a power supply system that infringes upon a U.S. patent held by Lufthansa. The patent at issue in the U.S. action is based on technology similar to that involved in the German action. On April 25, 2016, the Court issued its ruling on claim construction, holding that the sole independent claim in the patent is indefinite, rendering all claims in the patent indefinite. Based on this ruling, AES filed a motion for summary judgment on the grounds that the Court’s ruling that the patent is indefinite renders the patent invalid and unenforceable. On July 20, 2016, the U.S. District Court granted the motion for summary judgment and issued an order dismissing all claims against AES with prejudice. Lufthansa appealed the District Court's decision to the United States Court of Appeals for the Federal Circuit. On October 19, 2017, the Federal Circuit affirmed the district court’s decision, holding that the sole independent claim of the patent is indefinite, rending all claims on the patent indefinite. Lufthansa did not file a petition for en banc rehearing or petition the U.S. Supreme Court for a writ of certiorari. Therefore, there is no longer a risk of exposure from that lawsuit. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Below are the sales and operating profit by segment for the six months ended June 30, 2018 and July 1, 2017 and a reconciliation of segment operating profit to income before income taxes. Operating profit is net sales less cost of products sold and other operating expenses excluding interest and corporate expenses. Cost of products sold and other operating expenses are directly identifiable to the respective segment. Six Months Ended Three Months Ended (Dollars in thousands) June 30, July 1, June 30, July 1, Sales Aerospace $ 330,857 $ 266,374 $ 166,257 $ 129,547 Less Intersegment Sales (53 ) — (53 ) — Total Aerospace Sales 330,804 266,374 166,204 129,547 Test Systems 56,861 37,136 $ 42,402 $ 21,567 Total Consolidated Sales $ 387,665 $ 303,510 $ 208,606 $ 151,114 Operating Profit and Margins Aerospace $ 31,315 $ 33,738 $ 18,200 $ 13,984 9.5 % 12.7 % 11.0 % 10.8 % Test Systems 4,318 1,750 6,247 1,432 7.6 % 4.7 % 14.7 % 6.6 % Total Operating Profit 35,633 35,488 24,447 15,416 9.2 % 11.7 % 11.7 % 10.2 % Deductions from Operating Profit Interest Expense, Net of Interest Income 4,815 2,313 2,484 1,180 Corporate Expenses and Other 9,710 7,115 4,781 3,667 Income Before Income Taxes $ 21,108 $ 26,060 $ 17,182 $ 10,569 Total Assets: (In thousands) June 30, December 31, Aerospace $ 632,365 $ 621,047 Test Systems 110,903 90,859 Corporate 21,155 24,050 Total Assets $ 764,423 $ 735,956 |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value A fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. Fair value is based upon an exit price model. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and involves consideration of factors specific to the asset or liability. The Company follows a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. On a Recurring Basis: A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. There were no financial assets or liabilities carried at fair value measured on a recurring basis at December 31, 2017 or June 30, 2018 . On a Non-recurring Basis: The Company estimates the fair value of reporting units, utilizing unobservable Level 3 inputs. Level 3 inputs require significant management judgment due to the absence of quoted market prices or observable inputs for assets of a similar nature. The Company utilizes a discounted cash flow analysis to estimate the fair value of reporting units utilizing unobservable inputs. The fair value measurement of the reporting unit under the step-one and step-two analysis of the quantitative goodwill impairment test are classified as Level 3 inputs. Intangible assets that are amortized are evaluated for recoverability whenever adverse effects or changes in circumstances indicate that the carrying value may not be recoverable. The recoverability test consists of comparing the undiscounted projected cash flows with the carrying amount. Should the carrying amount exceed undiscounted projected cash flows, an impairment loss would be recognized to the extent the carrying amount exceeds fair value. For the Company’s indefinite-lived intangible asset, the impairment test consists of comparing the fair value, determined using the relief from royalty method, with its carrying amount. An impairment loss would be recognized for the carrying amount in excess of its fair value. Due to their short-term nature, the carrying value of cash and equivalents, accounts receivable, accounts payable, and notes payable approximate fair value. The carrying value of the Company’s variable rate long-term debt instruments also approximates fair value due to the variable rate feature of these instruments. As of June 30, 2018 , the Company concluded that no indicators of impairment relating to intangible assets or goodwill existed and an interim test was not performed. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Astronics Custom Control Concepts, Inc. On April 3, 2017 , Astronics Custom Control Concepts Inc., a wholly owned subsidiary of the Company, acquired substantially all the assets and certain liabilities of Custom Control Concepts LLC (“CCC”), located in Kent, Washington. CCC is a provider of cabin management and in-flight entertainment systems for a range of aircraft. The total consideration for the transaction was approximately $10.2 million , net of $0.5 million in cash acquired. All of the goodwill and purchased intangible assets are expected to be deductible for tax purposes over 15 years . The purchase price allocation for this acquisition has been finalized. CCC is included in our Aerospace segment. Astronics Connectivity Systems and Certifications Corp. On December 1, 2017, Astronics acquired substantially all of the assets of Telefonix Inc. and a related company, Product Development Technologies, LLC and its subsidiaries, to become Astronics Connectivity Systems and Certifications Corp. ("CSC"), primarily located in Waukegan and Lake Zurich, Illinois. CSC designs and manufactures advanced in-flight entertainment and connectivity equipment, and provides industry-leading design consultancy services for the global aerospace industry. The total consideration for the transaction was approximately $103.8 million , net of $0.2 million in cash acquired. All of the goodwill and purchased intangible assets are expected to be deductible for tax purposes over 15 years . CSC is included in our Aerospace Segment. The purchase price allocation for this acquisition has not yet been finalized. Refer to the Company's annual report on form 10-K for the fiscal year ended December 31, 2017 for further details on the assets acquired and liabilities assumed. There have been no significant changes to the preliminary allocation of purchase price in the three months ended June 30, 2018 . The following summary, prepared on a pro forma basis, combines the consolidated results of operations of the Company with those of CSC as if the acquisition took place on January 1, 2017. The pro forma consolidated results include the impact of certain adjustments, including increased interest expense on acquisition debt, amortization of purchased intangible assets and income taxes. Unaudited Six Months Ended Three Months Ended (in thousands, except earnings per share) July 1, 2017 as reported July 1, 2017 Pro Forma July 1, 2017 as reported July 1, 2017 Pro Forma Sales $ 303,510 $ 333,169 $ 151,114 $ 168,565 Net income $ 19,272 $ 18,232 $ 7,685 $ 7,880 Basic earnings per share $ 0.66 $ 0.63 $ 0.27 $ 0.27 Diluted earnings per share $ 0.64 $ 0.61 $ 0.26 $ 0.26 The pro forma results are not necessarily indicative of what actually would have occurred if the acquisition had been in effect for the three and six months ended July 1, 2017. In addition, they are not intended to be a projection of future results. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. |
Operating Results | Operating Results The results of operations for any interim period are not necessarily indicative of results for the full year. Operating results for the six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 . The balance sheet at December 31, 2017 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. |
Description of the Business | Description of the Business Astronics Corporation (“Astronics” or the “Company”) is a leading provider of advanced technologies to the global aerospace, defense, electronics and semiconductor industries. Our products and services include advanced, high-performance electrical power generation, distribution and motion systems, lighting and safety systems, avionics products, systems and certification, aircraft structures and automated test systems. |
Cost of Products Sold, Engineering and Development and Selling, General and Administrative Expenses | Cost of Products Sold, Engineering and Development and Selling, General and Administrative Expenses Cost of products sold includes the costs to manufacture products such as direct materials and labor and manufacturing overhead as well as all engineering and development costs. The Company is engaged in a variety of engineering and design activities as well as basic research and development activities directed to the substantial improvement or new application of the Company’s existing technologies. These costs are expensed when incurred and included in cost of products sold. |
Foreign Currency Translation | Foreign Currency Translation The aggregate transaction gain or loss included in operations was insignificant for the three and six months ended June 30, 2018 and July 1, 2017 . |
Newly Adopted and Recent Accounting Pronouncements | Newly Adopted and Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), that, together with several subsequent updates, outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. ASU 2014-09 is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also provides for enhanced disclosure requirements surrounding revenue recognition. Prior to the adoption of ASU 2014-09, revenue on a significant portion of our contracts had been recognized at the time of shipment of goods, transfer of title and customer acceptance, as required. Our revenue transactions generally consist of a single performance obligation to transfer promised goods and are not accounted for under industry-specific guidance. We have retained much of the same accounting treatment used to recognize revenue under the prior standard. However, the adoption of ASU 2014-09 required us to accelerate the recognition of revenue as compared to the prior standard for certain customers, in cases where we produce products unique to those customers, and for which we would have an enforceable right of payment, inclusive of profit, for production completed to date. We adopted ASU 2014-09 on January 1, 2018 using the modified retrospective method, which required the recognition of the cumulative effect of the transition as an adjustment to retained earnings. The Company elected to apply the standard only to open contracts as of January 1, 2018. Based on the application of the changes described above, we recognized a transition adjustment of $3.3 million , net of tax effects, which increased our January 1, 2018 retained earnings. Based on our existing operations, ASU 2014-09 is not expected to have a material impact to net earnings for the year ended December 31, 2018. Refer to Note 2 for additional information. During the first quarter of 2018, the Company early-adopted ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which allows for a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The Company applied the guidance as of the beginning of the period of adoption and reclassified approximately $1.4 million from accumulated other comprehensive loss to retained earnings due to the change in federal corporate tax rate. In February 2016, the FASB issued ASU No. 2016-02, Leases . The new standard is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. The standard will require lessees to report most leases as assets and liabilities on the balance sheet, while lessor accounting will remain substantially unchanged. The standard requires a modified retrospective transition approach for existing leases, whereby the new rules will be applied to the earliest year presented. The Company is currently evaluating the impact of ASU 2016-02 on our financial statements. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other Than Inventory , which requires entities to recognize income tax consequences of intra-entity transfers of assets, other than inventory, when the transfer occurs rather than when the asset is sold to a third party as is the case under current GAAP. The Company adopted ASU 2016-16 effective January 1, 2018, and such adoption did not have a material impact on the consolidated financial statements In January 2017, the FASB issued ASU No. 2017-01, Clarifying the Definition of a Business , which narrows the existing definition of a business and provides a framework for evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or a business. The ASU requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities (collectively, the set) is not a business. To be considered a business, the set would need to include an input and a substantive process that together significantly contribute to the ability to create outputs. The standard also narrows the definition of outputs. The definition of a business affects areas of accounting such as acquisitions, disposals and goodwill. Under the new guidance, fewer acquired sets are expected to be considered businesses. The Company adopted ASU 2017-01 effective January 1, 2018. The Company will apply this guidance to applicable transactions after the adoption date on a prospective basis. No applicable transactions have occurred as of June 30, 2018 . In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . This ASU changes how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the net periodic benefit cost in the income statement. This ASU was adopted as of January 1, 2018 on a retrospective basis. Under the new standard, only the service cost component of net periodic benefit cost would be included in operating expenses. All other net periodic benefit costs components (such as interest cost, prior service cost amortization and actuarial gain/loss amortization) would be reported outside of operating income. These include components totaling $0.5 million and $0.4 million for the three months ended and $1.0 million and $0.9 million for the six months ended June 30, 2018 and July 1, 2017 , respectively, that no longer are included within Selling, General and Administrative Expenses and instead are reported outside of income from operations, within Other Expense, Net of Other Income in our Consolidated Statements of Operations. In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting , that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as a modification. The general model for accounting for modifications of share-based payment awards is to record the incremental value arising from the changes as additional compensation cost. Under the new standard, fewer changes to the terms of an award would require accounting under this modification model. This ASU was adopted as of January 1, 2018. As the Company has not made changes to the terms or conditions of its issued share-based payment awards, this ASU had no impact on our consolidated results of operations and financial condition. |
Fair Value | Fair Value A fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. Fair value is based upon an exit price model. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and involves consideration of factors specific to the asset or liability. The Company follows a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Impact of Adoption of Standards Related to Revenue Recognition and Leases | The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09, were as follows (in thousands): Balance Sheet Balance at December 31, 2017 Adjustments Due to ASU 2014-09 Balance at January 1, 2018 Assets Accounts Receivable, Net of Allowance for Doubtful Accounts $ 132,633 $ 4,005 $ 136,638 Inventories $ 150,196 $ (7,957 ) $ 142,239 Liabilities Accrued Income Taxes $ 261 $ 1,028 $ 1,289 Customer Advance Payments and Deferred Revenue $ 19,607 $ (8,176 ) $ 11,431 Deferred Income Taxes $ 5,121 $ (72 ) $ 5,049 Equity Retained Earnings $ 325,191 $ 3,268 $ 328,459 In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated income statement and balance sheet was as follows (in thousands): For the Six Months Ended June 30, 2018 For the Three Months Ended June 30, 2018 Income Statement As Reported Effect of Change Higher/(Lower) Balances Without Adoption of ASU 2014-09 As Reported Effect of Change Higher/(Lower) Balances Without Adoption of ASU 2014-09 Revenues Aerospace $ 330,804 $ (771 ) $ 331,575 $ 166,204 $ (1,429 ) $ 167,633 Test Systems $ 56,861 $ (575 ) $ 57,436 $ 42,402 $ (2,536 ) $ 44,938 Costs and Expenses Cost of Products Sold $ 300,961 $ (1,467 ) $ 302,428 $ 159,034 $ (2,814 ) $ 161,848 Provision for Income Taxes $ 3,789 $ 21 $ 3,768 $ 3,157 $ (272 ) $ 3,429 Net Income $ 17,319 $ 100 $ 17,219 $ 14,025 $ (879 ) $ 14,904 June 30, 2018 Balance Sheet As Reported Effect of Change Higher/(Lower) Balances Without Adoption of ASU 2014-09 Assets Accounts Receivable, Net of Allowance for Doubtful Accounts $ 169,496 $ 6,330 $ 163,166 Inventories $ 159,479 $ (6,490 ) $ 165,969 Liabilities Accrued Expenses and Other Current Liabilities $ 38,590 $ 1,295 $ 37,295 Customer Advance Payments and Deferred Revenue $ 25,429 $ (4,505 ) $ 29,934 Other Liabilities $ 34,189 $ (318 ) $ 34,507 Equity Other Shareholders' Equity $ 366,859 $ 3,368 $ 363,491 |
Summary of Contract Assets and Liabilities | The following table presents the beginning and ending balances of contract assets and contract liabilities during the six months ended June 30, 2018 (in thousands): Contract Assets Contract Liabilities Beginning Balance, January 1, 2018 (1) $ 24,423 $ 11,431 Ending Balance, June 30, 2018 $ 20,672 $ 25,429 (1) Due to the adoption of ASU 2014-09 effective January 1, 2018, the Company recorded a transition adjustment to the opening balance of Contract Assets and Contract Liabilities at January 1, 2018. Refer to the cumulative effect of the changes table above for further explanation of the changes made to our consolidated January 1, 2018 balance sheet. |
Disaggregation of Revenue | The following table presents our revenue disaggregated by Market Segments (in thousands): Six Months Ended Three Months Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Aerospace Segment Commercial Transport $ 265,847 $ 208,079 $ 132,797 $ 98,355 Military 30,285 30,931 16,270 15,785 Business Jet 21,002 18,251 10,338 10,716 Other 13,670 9,113 6,799 4,691 Aerospace Total 330,804 266,374 166,204 129,547 Test Systems Segment Semiconductor 38,465 11,711 31,405 7,080 Aerospace & Defense 18,396 25,425 10,997 14,487 Test Systems Total 56,861 37,136 42,402 21,567 Total $ 387,665 $ 303,510 $ 208,606 $ 151,114 The following table presents our revenue disaggregated by Product Lines (in thousands): Six Months Ended Three Months Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Aerospace Segment Electrical Power & Motion $ 140,321 $ 135,040 $ 67,643 $ 62,597 Lighting & Safety 85,763 85,316 44,121 42,646 Avionics 69,295 20,076 36,272 10,940 Systems Certification 9,655 4,952 4,872 2,793 Structures 12,100 11,877 6,497 5,880 Other 13,670 9,113 6,799 4,691 Aerospace Total 330,804 266,374 166,204 129,547 Test Systems 56,861 37,136 42,402 21,567 Total $ 387,665 $ 303,510 $ 208,606 $ 151,114 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | ( In thousands ) June 30, December 31, Finished Goods $ 29,276 $ 35,193 Work in Progress 40,560 33,219 Raw Material 89,643 81,784 $ 159,479 $ 150,196 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property, Plant and Equipment | The following table summarizes Property, Plant and Equipment as follows: (In thousands) June 30, December 31, Land $ 11,212 $ 11,237 Buildings and Improvements 82,000 81,872 Machinery and Equipment 105,991 105,827 Construction in Progress 8,356 9,761 207,559 208,697 Less Accumulated Depreciation 82,863 82,867 $ 124,696 $ 125,830 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Acquired Intangible Assets | The following table summarizes acquired intangible assets as follows: June 30, 2018 December 31, 2017 (In thousands) Weighted Average Life Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Patents 11 Years $ 2,146 $ 1,672 $ 2,146 $ 1,629 Non-compete Agreement 4 Years 10,900 3,184 10,900 1,687 Trade Names 10 Years 11,471 4,648 11,492 4,114 Completed and Unpatented Technology 10 Years 38,078 13,945 38,114 11,931 Backlog 2 Years 14,424 14,424 14,424 12,184 Customer Relationships 15 Years 137,902 34,504 137,967 30,005 Total Intangible Assets 12 Years $ 214,921 $ 72,377 $ 215,043 $ 61,550 |
Summary of Amortization Expense for Acquired Intangibles | All acquired intangible assets other than goodwill and one trade name are being amortized. Amortization expense for acquired intangibles is summarized as follows: Six Months Ended Three Months Ended (In thousands) June 30, July 1, June 30, July 1, Amortization Expense $ 10,868 $ 5,340 $ 4,867 $ 2,722 |
Summary of Amortization Expense for Intangible Assets for Each of Next Five Years | Amortization expense for acquired intangible assets expected for 2018 and for each of the next five years is summarized as follows: (In thousands) 2018 $ 19,384 2019 16,700 2020 15,975 2021 14,065 2022 13,631 2023 12,463 |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Changes in Carrying Amount of Goodwill | The following table summarizes the changes in the carrying amount of goodwill for the six months ended June 30, 2018 : (In thousands) December 31, Acquisition/Adjustments Foreign Currency Translation June 30, Aerospace $ 125,645 $ (141 ) $ (267 ) $ 125,237 Test Systems — — — — $ 125,645 $ (141 ) $ (267 ) $ 125,237 |
Product Warranties (Tables)
Product Warranties (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Product Warranties Disclosures [Abstract] | |
Summary of Activity in Warranty Accrual | Activity in the warranty accrual is summarized as follows: Six Months Ended Three Months Ended (In thousands) June 30, July 1, June 30, July 1, Balance at Beginning of Period $ 5,136 $ 4,675 $ 5,115 $ 4,357 Acquisitions — 359 — 359 Warranties Issued 1,301 832 734 365 Warranties Settled (1,285 ) (1,224 ) (645 ) (517 ) Reassessed Warranty Exposure 28 (5 ) (24 ) 73 Balance at End of Period $ 5,180 $ 4,637 $ 5,180 $ 4,637 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Summary of Changes in Shareholder's Equity | The changes in shareholders’ equity for the six months ended June 30, 2018 are summarized as follows: Number of Shares (Dollars and Shares in thousands) Amount Common Stock Convertible Class B Stock Shares Authorized 40,000 15,000 Share Par Value $ 0.01 $ 0.01 COMMON STOCK Beginning of Period $ 297 22,861 6,852 Conversion of Class B Shares to Common Shares — 332 (332 ) Exercise of Stock Options 1 26 38 End of Period $ 298 23,219 6,558 ADDITIONAL PAID IN CAPITAL Beginning of Period $ 67,791 Stock Compensation Expense 1,637 Exercise of Stock Options 280 End of Period $ 69,708 ACCUMULATED OTHER COMPREHENSIVE LOSS Beginning of Period $ (13,352 ) Adoption of ASU 2018-02 (1,373 ) Foreign Currency Translation Adjustment (1,572 ) Retirement Liability Adjustment – Net of Tax 430 End of Period $ (15,867 ) RETAINED EARNINGS Beginning of Period $ 325,191 Adoption of ASU 2014-09 3,268 Adoption of ASU 2018-02 1,373 Net Income 17,319 End of Period $ 347,151 TREASURY STOCK Beginning of Period $ (50,000 ) (1,675 ) Purchase — — End of Period $ (50,000 ) (1,675 ) TOTAL SHAREHOLDERS’ EQUITY Beginning of Period $ 329,927 End of Period $ 351,290 21,544 6,558 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Summary of Basic and Diluted Weighted-Average Shares Outstanding | Basic and diluted weighted-average shares outstanding are as follows: Six Months Ended Three Months Ended (In thousands) June 30, July 1, June 30, July 1, Weighted Average Shares - Basic 28,085 29,007 28,098 28,911 Net Effect of Dilutive Stock Options 670 1,128 704 1,178 Weighted Average Shares - Diluted 28,755 30,135 28,802 30,089 |
Accumulated Other Comprehensi33
Accumulated Other Comprehensive Loss and Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss are as follows: (In thousands) June 30, December 31, Foreign Currency Translation Adjustments $ (6,037 ) $ (4,465 ) Retirement Liability Adjustment – Before Tax (12,443 ) (12,988 ) Tax Benefit of Retirement Liability Adjustment 3,986 4,101 Adoption of ASU 2018-02 (1,373 ) — Retirement Liability Adjustment – After Tax (9,830 ) (8,887 ) Accumulated Other Comprehensive Loss $ (15,867 ) $ (13,352 ) |
Components of Other Comprehensive Income | The components of other comprehensive (loss) income are as follows: Six Months Ended Three Months Ended (In thousands) June 30, July 1, June 30, July 1, Foreign Currency Translation Adjustments $ (1,572 ) $ 2,491 $ (1,805 ) $ 2,096 Retirement Liability Adjustments: Reclassifications to General and Administrative Expense: Amortization of Prior Service Cost 202 202 101 102 Amortization of Net Actuarial Losses 343 201 172 99 Tax Benefit (115 ) (141 ) (58 ) (70 ) Retirement Liability Adjustment 430 262 215 131 Other Comprehensive (Loss) Income $ (1,142 ) $ 2,753 $ (1,590 ) $ 2,227 |
Supplemental Retirement Plan 34
Supplemental Retirement Plan and Related Post Retirement Benefits (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Summary of the Components of Net Periodic Cost | The following table sets forth information regarding the net periodic pension cost for the plans. Six Months Ended Three Months Ended (In thousands) June 30, July 1, June 30, July 1, Service Cost $ 100 $ 92 $ 50 $ 46 Interest Cost 450 448 225 224 Amortization of Prior Service Cost 194 194 97 97 Amortization of Net Actuarial Losses 314 186 157 93 Net Periodic Cost $ 1,058 $ 920 $ 529 $ 460 Participants in the SERP are entitled to paid medical, dental and long-term care insurance benefits upon retirement under the plan. The following table sets forth information regarding the net periodic cost recognized for those benefits: Six Months Ended Three Months Ended (In thousands) June 30, July 1, June 30, July 1, Service Cost $ 8 $ 4 $ 4 $ 2 Interest Cost 23 20 12 10 Amortization of Prior Service Cost 8 8 4 5 Amortization of Net Actuarial Losses 29 15 15 6 Net Periodic Cost $ 68 $ 47 $ 35 $ 23 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Summary of Segment Reporting Information | Below are the sales and operating profit by segment for the six months ended June 30, 2018 and July 1, 2017 and a reconciliation of segment operating profit to income before income taxes. Operating profit is net sales less cost of products sold and other operating expenses excluding interest and corporate expenses. Cost of products sold and other operating expenses are directly identifiable to the respective segment. Six Months Ended Three Months Ended (Dollars in thousands) June 30, July 1, June 30, July 1, Sales Aerospace $ 330,857 $ 266,374 $ 166,257 $ 129,547 Less Intersegment Sales (53 ) — (53 ) — Total Aerospace Sales 330,804 266,374 166,204 129,547 Test Systems 56,861 37,136 $ 42,402 $ 21,567 Total Consolidated Sales $ 387,665 $ 303,510 $ 208,606 $ 151,114 Operating Profit and Margins Aerospace $ 31,315 $ 33,738 $ 18,200 $ 13,984 9.5 % 12.7 % 11.0 % 10.8 % Test Systems 4,318 1,750 6,247 1,432 7.6 % 4.7 % 14.7 % 6.6 % Total Operating Profit 35,633 35,488 24,447 15,416 9.2 % 11.7 % 11.7 % 10.2 % Deductions from Operating Profit Interest Expense, Net of Interest Income 4,815 2,313 2,484 1,180 Corporate Expenses and Other 9,710 7,115 4,781 3,667 Income Before Income Taxes $ 21,108 $ 26,060 $ 17,182 $ 10,569 Total Assets: (In thousands) June 30, December 31, Aerospace $ 632,365 $ 621,047 Test Systems 110,903 90,859 Corporate 21,155 24,050 Total Assets $ 764,423 $ 735,956 |
Acquisitions Acquisitions (Tabl
Acquisitions Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Summary of Pro Forma Results | The following summary, prepared on a pro forma basis, combines the consolidated results of operations of the Company with those of CSC as if the acquisition took place on January 1, 2017. The pro forma consolidated results include the impact of certain adjustments, including increased interest expense on acquisition debt, amortization of purchased intangible assets and income taxes. Unaudited Six Months Ended Three Months Ended (in thousands, except earnings per share) July 1, 2017 as reported July 1, 2017 Pro Forma July 1, 2017 as reported July 1, 2017 Pro Forma Sales $ 303,510 $ 333,169 $ 151,114 $ 168,565 Net income $ 19,272 $ 18,232 $ 7,685 $ 7,880 Basic earnings per share $ 0.66 $ 0.63 $ 0.27 $ 0.27 Diluted earnings per share $ 0.64 $ 0.61 $ 0.26 $ 0.26 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Mar. 31, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Business Acquisition [Line Items] | |||||||
Research and development, design and related engineering | $ 28,900 | $ 23,000 | $ 57,800 | $ 45,800 | |||
Capitalized precontract cost | 9,500 | 9,500 | |||||
Adoption of ASU 2018-02 | $ 1,400 | ||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | |||||||
Business Acquisition [Line Items] | |||||||
Adoption of ASU 2018-02 | (1,373) | ||||||
RETAINED EARNINGS | |||||||
Business Acquisition [Line Items] | |||||||
Adoption of ASU 2018-02 | 1,373 | ||||||
Accounting Standards Update 2014-09 | RETAINED EARNINGS | |||||||
Business Acquisition [Line Items] | |||||||
Adoption of ASU 2014-09 | $ 3,300 | $ 3,268 | |||||
Selling, General and Administrative Expenses | Accounting Standards Update 2017-07 | |||||||
Business Acquisition [Line Items] | |||||||
Other net periodic benefit costs | 500 | 400 | 1,000 | 900 | |||
Other Expense | Accounting Standards Update 2017-07 | |||||||
Business Acquisition [Line Items] | |||||||
Other net periodic benefit costs | $ (500) | $ (400) | $ (1,000) | $ (900) |
Revenue - Cumulative Effect of
Revenue - Cumulative Effect of Changes (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Accounts Receivable, Net of Allowance for Doubtful Accounts | $ 169,496 | $ 136,638 | $ 132,633 |
Inventories | 159,479 | 142,239 | 150,196 |
Accrued Income Taxes | 1,289 | ||
Contract Liabilities | 25,429 | 11,431 | 19,607 |
Deferred Income Taxes | 5,049 | ||
Retained Earnings | 328,459 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Accounts Receivable, Net of Allowance for Doubtful Accounts | 163,166 | 132,633 | |
Inventories | 165,969 | 150,196 | |
Accrued Income Taxes | 261 | ||
Contract Liabilities | 29,934 | 19,607 | |
Deferred Income Taxes | 5,121 | ||
Retained Earnings | $ 325,191 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Accounts Receivable, Net of Allowance for Doubtful Accounts | 6,330 | 4,005 | |
Inventories | (6,490) | (7,957) | |
Accrued Income Taxes | 1,028 | ||
Contract Liabilities | $ (4,505) | (8,176) | |
Deferred Income Taxes | (72) | ||
Retained Earnings | $ 3,268 |
Revenue - Impact on Financial S
Revenue - Impact on Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Income Statement | ||||||
Revenues | $ 208,606 | $ 151,114 | $ 387,665 | $ 303,510 | ||
Cost of Products Sold | 159,034 | 116,964 | 300,961 | 231,043 | ||
Provision for Income Taxes | 3,157 | 2,884 | 3,789 | 6,788 | ||
Net Income | 14,025 | 7,685 | 17,319 | 19,272 | ||
Balance Sheet | ||||||
Accounts Receivable, Net of Allowance for Doubtful Accounts | 169,496 | 169,496 | $ 136,638 | $ 132,633 | ||
Inventories | 159,479 | 159,479 | 142,239 | 150,196 | ||
Accrued Expenses and Other Current Liabilities | 38,590 | 38,590 | 38,749 | |||
Contract Liabilities | 25,429 | 25,429 | 11,431 | 19,607 | ||
Other Liabilities | 34,189 | 34,189 | 34,060 | |||
Other Shareholders’ Equity | 366,859 | 366,859 | 342,982 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | ||||||
Income Statement | ||||||
Cost of Products Sold | 161,848 | 302,428 | ||||
Provision for Income Taxes | 3,429 | 3,768 | ||||
Net Income | 14,904 | 17,219 | ||||
Balance Sheet | ||||||
Accounts Receivable, Net of Allowance for Doubtful Accounts | 163,166 | 163,166 | 132,633 | |||
Inventories | 165,969 | 165,969 | 150,196 | |||
Accrued Expenses and Other Current Liabilities | 37,295 | 37,295 | ||||
Contract Liabilities | 29,934 | 29,934 | $ 19,607 | |||
Other Liabilities | 34,507 | 34,507 | ||||
Other Shareholders’ Equity | 363,491 | 363,491 | ||||
Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | ||||||
Income Statement | ||||||
Cost of Products Sold | (2,814) | (1,467) | ||||
Provision for Income Taxes | (272) | 21 | ||||
Net Income | (879) | 100 | ||||
Balance Sheet | ||||||
Accounts Receivable, Net of Allowance for Doubtful Accounts | 6,330 | 6,330 | 4,005 | |||
Inventories | (6,490) | (6,490) | (7,957) | |||
Accrued Expenses and Other Current Liabilities | 1,295 | 1,295 | ||||
Contract Liabilities | (4,505) | (4,505) | $ (8,176) | |||
Other Liabilities | (318) | (318) | ||||
Other Shareholders’ Equity | 3,368 | 3,368 | ||||
Aerospace | ||||||
Income Statement | ||||||
Revenues | 166,204 | 129,547 | 330,804 | 266,374 | ||
Aerospace | Calculated under Revenue Guidance in Effect before Topic 606 | ||||||
Income Statement | ||||||
Revenues | 167,633 | 331,575 | ||||
Aerospace | Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | ||||||
Income Statement | ||||||
Revenues | (1,429) | (771) | ||||
Test Systems | ||||||
Income Statement | ||||||
Revenues | 42,402 | $ 21,567 | 56,861 | $ 37,136 | ||
Test Systems | Calculated under Revenue Guidance in Effect before Topic 606 | ||||||
Income Statement | ||||||
Revenues | 44,938 | 57,436 | ||||
Test Systems | Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | ||||||
Income Statement | ||||||
Revenues | $ (2,536) | $ (575) |
Revenue - Narrative (Details)
Revenue - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue recognized included in contract liability balance | $ 8.4 | $ 11.6 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation | 376.9 | $ 376.9 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Period of recognition | 6 months | |
Remaining performance obligation | $ 309.1 | $ 309.1 |
Revenue - Summary of Contract A
Revenue - Summary of Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Revenue from Contract with Customer [Abstract] | |||
Contract Assets | $ 20,672 | $ 24,423 | |
Contract Liabilities | $ 25,429 | $ 11,431 | $ 19,607 |
Revenue - Disaggregated Revenue
Revenue - Disaggregated Revenue by Market (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 208,606 | $ 151,114 | $ 387,665 | $ 303,510 |
Commercial Transport | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 132,797 | 98,355 | 265,847 | 208,079 |
Military Aircraft | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 16,270 | 15,785 | 30,285 | 30,931 |
Business Jet | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 10,338 | 10,716 | 21,002 | 18,251 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 6,799 | 4,691 | 13,670 | 9,113 |
Aerospace | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 166,204 | 129,547 | 330,804 | 266,374 |
Semiconductor | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 31,405 | 7,080 | 38,465 | 11,711 |
Aerospace & Defense | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 10,997 | 14,487 | 18,396 | 25,425 |
Test Systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 42,402 | $ 21,567 | $ 56,861 | $ 37,136 |
Revenue - Disaggregated Reven43
Revenue - Disaggregated Revenue by Product Line (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 208,606 | $ 151,114 | $ 387,665 | $ 303,510 |
Aerospace | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 166,204 | 129,547 | 330,804 | 266,374 |
Test Systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 42,402 | 21,567 | 56,861 | 37,136 |
Electrical Power & Motion | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 67,643 | 62,597 | 140,321 | 135,040 |
Lighting & Safety | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 44,121 | 42,646 | 85,763 | 85,316 |
Avionics | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 36,272 | 10,940 | 69,295 | 20,076 |
Systems Certification | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 4,872 | 2,793 | 9,655 | 4,952 |
Structures | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 6,497 | 5,880 | 12,100 | 11,877 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 6,799 | $ 4,691 | $ 13,670 | $ 9,113 |
Inventories - Summary of Invent
Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | |||
Finished Goods | $ 29,276 | $ 35,193 | |
Work in Progress | 40,560 | 33,219 | |
Raw Material | 89,643 | 81,784 | |
Inventory, net | $ 159,479 | $ 142,239 | $ 150,196 |
Property, Plant and Equipment -
Property, Plant and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 207,559 | $ 208,697 |
Less Accumulated Depreciation | 82,863 | 82,867 |
Property, plant and equipment, net | 124,696 | 125,830 |
Land | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 11,212 | 11,237 |
Buildings and Improvements | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 82,000 | 81,872 |
Machinery and Equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 105,991 | 105,827 |
Construction in Progress | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 8,356 | $ 9,761 |
Intangible Assets - Summary of
Intangible Assets - Summary of Acquired Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets | ||
Weighted Average Life | 12 years | |
Gross Carrying Amount | $ 214,921 | $ 215,043 |
Accumulated Amortization | $ 72,377 | 61,550 |
Patents | ||
Finite-Lived Intangible Assets | ||
Weighted Average Life | 11 years | |
Gross Carrying Amount | $ 2,146 | 2,146 |
Accumulated Amortization | $ 1,672 | 1,629 |
Non-compete Agreement | ||
Finite-Lived Intangible Assets | ||
Weighted Average Life | 4 years | |
Gross Carrying Amount | $ 10,900 | 10,900 |
Accumulated Amortization | $ 3,184 | 1,687 |
Trade Names | ||
Finite-Lived Intangible Assets | ||
Weighted Average Life | 10 years | |
Gross Carrying Amount | $ 11,471 | 11,492 |
Accumulated Amortization | $ 4,648 | 4,114 |
Completed and Unpatented Technology | ||
Finite-Lived Intangible Assets | ||
Weighted Average Life | 10 years | |
Gross Carrying Amount | $ 38,078 | 38,114 |
Accumulated Amortization | $ 13,945 | 11,931 |
Backlog | ||
Finite-Lived Intangible Assets | ||
Weighted Average Life | 2 years | |
Gross Carrying Amount | $ 14,424 | 14,424 |
Accumulated Amortization | $ 14,424 | 12,184 |
Customer Relationships | ||
Finite-Lived Intangible Assets | ||
Weighted Average Life | 15 years | |
Gross Carrying Amount | $ 137,902 | 137,967 |
Accumulated Amortization | $ 34,504 | $ 30,005 |
Intangible Assets - Summary o47
Intangible Assets - Summary of Amortization Expense for Acquired Intangibles (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization Expense | $ 4,867 | $ 2,722 | $ 10,868 | $ 5,340 |
Intangible Assets - Summary o48
Intangible Assets - Summary of Amortization Expense for Intangible Assets for Each of Next Five Years (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | |
2,018 | $ 19,384 |
2,019 | 16,700 |
2,020 | 15,975 |
2,021 | 14,065 |
2,022 | 13,631 |
2,023 | $ 12,463 |
Goodwill - Summary of Changes i
Goodwill - Summary of Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 125,645 |
Acquisition/Adjustments | (141) |
Foreign Currency Translation | (267) |
Balance at end of period | 125,237 |
Operating Segments | Aerospace | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 125,645 |
Acquisition/Adjustments | (141) |
Foreign Currency Translation | (267) |
Balance at end of period | 125,237 |
Operating Segments | Test Systems | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 0 |
Acquisition/Adjustments | 0 |
Foreign Currency Translation | 0 |
Balance at end of period | $ 0 |
Long-Term Debt and Notes Paya50
Long-Term Debt and Notes Payable (Details) | 6 Months Ended |
Jun. 30, 2018USD ($)fiscal_quarter | |
Debt Instrument | |
Duration of permitted leverage ratio following acquisition, number of fiscal quarters | fiscal_quarter | 4 |
Leverage ratio | 2.80 |
Fourth Amended and Restated Credit Agreement | Line of Credit | Revolving Credit Facility | |
Debt Instrument | |
Maximum borrowing capacity | $ 350,000,000 |
Line of credit facility increase amount | $ 150,000,000 |
Amended and Restated Credit Agreement | |
Debt Instrument | |
Ratio of funded debt to Adjusted EBITDA | 3.75 |
Amended and Restated Credit Agreement | Maximum | |
Debt Instrument | |
Ratio of funded debt to Adjusted EBITDA | 4.50 |
Amended and Restated Credit Agreement | Line of Credit | Revolving Credit Facility | |
Debt Instrument | |
Maximum borrowing capacity | $ 500,000,000 |
Line of credit facility increase amount | 150,000,000 |
Credit facility outstanding | 257,000,000 |
Revolving credit facility remaining | $ 241,900,000 |
Amended and Restated Credit Agreement | Line of Credit | Revolving Credit Facility | Minimum | |
Debt Instrument | |
Basis points for commitment fee | 0.10% |
Amended and Restated Credit Agreement | Line of Credit | Revolving Credit Facility | Minimum | LIBOR | |
Debt Instrument | |
Basis points for variable interest rate | 1.00% |
Amended and Restated Credit Agreement | Line of Credit | Revolving Credit Facility | Maximum | |
Debt Instrument | |
Basis points for commitment fee | 0.20% |
Amended and Restated Credit Agreement | Line of Credit | Revolving Credit Facility | Maximum | LIBOR | |
Debt Instrument | |
Basis points for variable interest rate | 1.50% |
Amended and Restated Credit Agreement | Line of Credit | Letter of Credit | |
Debt Instrument | |
Credit facility allocated (up to) | $ 20,000,000 |
Outstanding letters of credit | $ 1,100,000 |
Product Warranties - Summary of
Product Warranties - Summary of Activity in Warranty Accrual (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Balance at Beginning of Period | $ 5,115 | $ 4,357 | $ 5,136 | $ 4,675 |
Acquisitions | 0 | 359 | 0 | 359 |
Warranties Issued | 734 | 365 | 1,301 | 832 |
Warranties Settled | (645) | (517) | (1,285) | (1,224) |
Reassessed Warranty Exposure | (24) | 73 | 28 | (5) |
Balance at End of Period | $ 5,180 | $ 4,637 | $ 5,180 | $ 4,637 |
Minimum | ||||
Product Liability Contingency [Line Items] | ||||
Product warranty period | 12 months | |||
Maximum | ||||
Product Liability Contingency [Line Items] | ||||
Product warranty period | 60 months |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 18.40% | 27.30% | 18.00% | 26.00% |
Effective income tax rate reconciliation, foreign-derived intangible income deduction, percent | 0.20% | 0.30% |
Shareholders' Equity - Summary
Shareholders' Equity - Summary of Changes in Shareholders' Equity (Details) - USD ($) | Dec. 12, 2017 | Jun. 30, 2018 | Mar. 31, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Beginning of Period | $ 329,927,000 | $ 329,927,000 | |||||||
Adoption of ASU 2018-02 | 1,400,000 | ||||||||
Foreign Currency Translation Adjustment | $ (1,805,000) | $ 2,096,000 | (1,572,000) | $ 2,491,000 | |||||
Retirement Liability Adjustment – Net of Tax | 215,000 | 131,000 | 430,000 | 262,000 | |||||
Net Income | 14,025,000 | $ 7,685,000 | 17,319,000 | $ 19,272,000 | |||||
End of Period | $ 351,290,000 | $ 351,290,000 | |||||||
Common Stock | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
End of Period (in shares) | 21,544,000 | 21,544,000 | |||||||
Convertible Class B Stock | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
End of Period (in shares) | 6,558,000 | 6,558,000 | |||||||
COMMON STOCK | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Beginning of Period | $ 297,000 | $ 297,000 | |||||||
Conversion of Class B Shares to Common Shares | 0 | ||||||||
Exercise of Stock Options | 1,000 | ||||||||
End of Period | $ 298,000 | $ 298,000 | |||||||
COMMON STOCK | Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Shares Authorized (in shares) | 40,000,000 | 40,000,000 | |||||||
Share Par Value (in usd per share) | $ 0.01 | $ 0.01 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Beginning of Period (in shares) | 22,861,000 | 22,861,000 | |||||||
Conversion of Class B Shares to Common Shares (in shares) | 332,000 | ||||||||
Exercise of Stock Options (in shares) | 26,000 | ||||||||
End of Period (in shares) | 23,219,000 | 23,219,000 | |||||||
COMMON STOCK | Convertible Class B Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Shares Authorized (in shares) | 15,000,000 | 15,000,000 | |||||||
Share Par Value (in usd per share) | $ 0.01 | $ 0.01 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Beginning of Period (in shares) | 6,852,000 | 6,852,000 | |||||||
Conversion of Class B Shares to Common Shares (in shares) | (332,000) | ||||||||
Exercise of Stock Options (in shares) | 38,000 | ||||||||
End of Period (in shares) | 6,558,000 | 6,558,000 | |||||||
ADDITIONAL PAID IN CAPITAL | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Beginning of Period | $ 67,791,000 | $ 67,791,000 | |||||||
Exercise of Stock Options | 280,000 | ||||||||
Stock Compensation Expense | 1,637,000 | ||||||||
End of Period | $ 69,708,000 | 69,708,000 | |||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Beginning of Period | (13,352,000) | (13,352,000) | |||||||
Adoption of ASU 2018-02 | (1,373,000) | ||||||||
Foreign Currency Translation Adjustment | (1,572,000) | ||||||||
Retirement Liability Adjustment – Net of Tax | 430,000 | ||||||||
End of Period | (15,867,000) | (15,867,000) | |||||||
RETAINED EARNINGS | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Beginning of Period | 325,191,000 | 325,191,000 | |||||||
Adoption of ASU 2018-02 | 1,373,000 | ||||||||
Net Income | 17,319,000 | ||||||||
End of Period | 347,151,000 | 347,151,000 | |||||||
RETAINED EARNINGS | Accounting Standards Update 2014-09 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Adoption of ASU 2014-09 | $ 3,300,000 | $ 3,268,000 | |||||||
TREASURY STOCK | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Beginning of Period | $ (50,000,000) | $ (50,000,000) | |||||||
Beginning of Period (in shares) | (1,675,000) | (1,675,000) | |||||||
Purchase | $ (50,000,000) | $ 0 | |||||||
Purchase (in shares) | 0 | 1,675,000 | |||||||
End of Period | $ (50,000,000) | $ (50,000,000) | |||||||
End of Period (in shares) | (1,675,000) | (1,675,000) |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) | Dec. 12, 2017 | Jun. 30, 2018 | Mar. 31, 2018 | Feb. 24, 2016 |
Class of Stock [Line Items] | ||||
Authorized repurchase of common stock, amount | $ 50,000,000 | |||
Treasury Stock | ||||
Class of Stock [Line Items] | ||||
Number of shares repurchased (in shares) | 0 | 1,675,000 | ||
Repurchase of shares | $ 50,000,000 | $ 0 |
Earnings Per Share - Summary of
Earnings Per Share - Summary of Basic and Diluted Weighted-Average Shares Outstanding (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Earnings Per Share [Abstract] | ||||
Weighted Average Shares - Basic (in shares) | 28,098 | 28,911 | 28,085 | 29,007 |
Net Effect of Dilutive Stock Options (in shares) | 704 | 1,178 | 670 | 1,128 |
Weighted Average Shares - Diluted (in shares) | 28,802 | 30,089 | 28,755 | 30,135 |
Out-of-the-money stock options | 139 |
Accumulated Other Comprehensi56
Accumulated Other Comprehensive Loss and Other Comprehensive Income - Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2018 | Jun. 30, 2018 | Jul. 01, 2017 | Dec. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Total Shareholders’ Equity | $ 351,290 | $ 329,927 | ||
Adoption of ASU 2018-02 | $ 1,400 | |||
Foreign Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Total Shareholders’ Equity | (6,037) | (4,465) | ||
Retirement Liability Adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Total Shareholders’ Equity | (9,830) | (8,887) | ||
Retirement Liability Adjustment – Before Tax | (12,443) | (12,988) | ||
Tax Benefit of Retirement Liability Adjustment | 3,986 | 4,101 | ||
Adoption of ASU 2018-02 | (1,373) | $ 0 | ||
Accumulated Other Comprehensive Loss | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Total Shareholders’ Equity | (15,867) | $ (13,352) | ||
Adoption of ASU 2018-02 | $ (1,373) |
Accumulated Other Comprehensi57
Accumulated Other Comprehensive Loss and Other Comprehensive Income - Components of Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other Comprehensive Income | $ (1,590) | $ 2,227 | $ (1,142) | $ 2,753 |
Foreign Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other Comprehensive Income | (1,805) | 2,096 | (1,572) | 2,491 |
Amortization of Prior Service Cost | ||||
Reclassifications to General and Administrative Expense: | ||||
Reclassifications to General and Administrative Expense | 101 | 102 | 202 | 202 |
Amortization of Net Actuarial Losses | ||||
Reclassifications to General and Administrative Expense: | ||||
Reclassifications to General and Administrative Expense | 172 | 99 | 343 | 201 |
Retirement Liability Adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other Comprehensive Income | 215 | 131 | 430 | 262 |
Reclassifications to General and Administrative Expense: | ||||
Tax Benefit | $ (58) | $ (70) | $ (115) | $ (141) |
Supplemental Retirement Plan 58
Supplemental Retirement Plan and Related Post Retirement Benefits - Summary of the Components of Net Periodic Cost (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018USD ($) | Jul. 01, 2017USD ($) | Jun. 30, 2018USD ($)retirement_plan | Jul. 01, 2017USD ($) | |
Retirement Benefits [Abstract] | ||||
Number of non-qualified supplemental retirement defined benefit plans | retirement_plan | 2 | |||
SERP | ||||
Defined Benefit Plan Disclosure | ||||
Service Cost | $ 50 | $ 46 | $ 100 | $ 92 |
Interest Cost | 225 | 224 | 450 | 448 |
Amortization of Prior Service Cost | 97 | 97 | 194 | 194 |
Amortization of Net Actuarial Losses | 157 | 93 | 314 | 186 |
Net Periodic Cost | 529 | 460 | 1,058 | 920 |
SERP | SERP Medical | ||||
Defined Benefit Plan Disclosure | ||||
Service Cost | 4 | 2 | 8 | 4 |
Interest Cost | 12 | 10 | 23 | 20 |
Amortization of Prior Service Cost | 4 | 5 | 8 | 8 |
Amortization of Net Actuarial Losses | 15 | 6 | 29 | 15 |
Net Periodic Cost | $ 35 | $ 23 | $ 68 | $ 47 |
Sales to Major Customers (Detai
Sales to Major Customers (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018USD ($) | Jul. 01, 2017 | Jun. 30, 2018USD ($)customer | Jul. 01, 2017customer | |
Segment Reporting, Asset Reconciling Item | ||||
Number of major customers | customer | 2 | 2 | ||
Sales Revenue, Net | Customer Concentration Risk | Major Customer One | ||||
Segment Reporting, Asset Reconciling Item | ||||
Percent of consolidated revenue | 12.00% | 16.00% | 16.00% | 20.00% |
Sales Revenue, Net | Customer Concentration Risk | Major Customer Two | ||||
Segment Reporting, Asset Reconciling Item | ||||
Percent of consolidated revenue | 14.00% | 18.00% | 15.00% | 18.00% |
Sales Revenue, Net | Customer Concentration Risk | Two Major Customers | ||||
Segment Reporting, Asset Reconciling Item | ||||
Accounts receivable from major customers | $ | $ 31.5 | $ 31.5 |
Legal Proceedings Legal Proceed
Legal Proceedings Legal Proceedings (Details) - Germany - Lufthansa Technik AG $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($)product | |
Loss Contingencies [Line Items] | |
Number of products in distribution channels | product | 0 |
Patent Infringement | AES | |
Loss Contingencies [Line Items] | |
Damages sought | $ 6.2 |
Recorded reserve | 1 |
Patent Infringement | AES | Minimum | |
Loss Contingencies [Line Items] | |
Estimate of the value of the dispute | 1 |
Patent Infringement | AES | Maximum | |
Loss Contingencies [Line Items] | |
Estimate of the value of the dispute | $ 3 |
Segment Information - Summary o
Segment Information - Summary of Segment Reporting Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Dec. 31, 2017 | |
Segment Reporting Information | |||||
Revenues | $ 208,606 | $ 151,114 | $ 387,665 | $ 303,510 | |
Operating Profit and Margins | |||||
Total Operating Profit | 20,129 | 12,059 | 26,761 | 28,993 | |
Deductions from Operating Profit | |||||
Interest Expense, Net of Interest Income | 2,484 | 1,180 | 4,815 | 2,313 | |
Income Before Income Taxes | 17,182 | 10,569 | 21,108 | 26,060 | |
Total Assets | 764,423 | 764,423 | $ 735,956 | ||
Aerospace | |||||
Segment Reporting Information | |||||
Revenues | 166,204 | 129,547 | 330,804 | 266,374 | |
Test Systems | |||||
Segment Reporting Information | |||||
Revenues | 42,402 | 21,567 | 56,861 | 37,136 | |
Operating Segments | |||||
Operating Profit and Margins | |||||
Total Operating Profit | $ 24,447 | $ 15,416 | $ 35,633 | $ 35,488 | |
Operating margins, percentage | 11.70% | 10.20% | 9.20% | 11.70% | |
Operating Segments | Aerospace | |||||
Segment Reporting Information | |||||
Revenues | $ 166,257 | $ 129,547 | $ 330,857 | $ 266,374 | |
Operating Profit and Margins | |||||
Total Operating Profit | $ 18,200 | $ 13,984 | $ 31,315 | $ 33,738 | |
Operating margins, percentage | 11.00% | 10.80% | 9.50% | 12.70% | |
Deductions from Operating Profit | |||||
Total Assets | $ 632,365 | $ 632,365 | 621,047 | ||
Operating Segments | Test Systems | |||||
Segment Reporting Information | |||||
Revenues | 42,402 | $ 21,567 | 56,861 | $ 37,136 | |
Operating Profit and Margins | |||||
Total Operating Profit | $ 6,247 | $ 1,432 | $ 4,318 | $ 1,750 | |
Operating margins, percentage | 14.70% | 6.60% | 7.60% | 4.70% | |
Deductions from Operating Profit | |||||
Total Assets | $ 110,903 | $ 110,903 | 90,859 | ||
Less Intersegment Sales | Aerospace | |||||
Segment Reporting Information | |||||
Revenues | (53) | $ 0 | (53) | $ 0 | |
Corporate Expenses and Other | |||||
Deductions from Operating Profit | |||||
Corporate Expenses and Other | 4,781 | $ 3,667 | 9,710 | $ 7,115 | |
Total Assets | $ 21,155 | $ 21,155 | $ 24,050 |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities Carried at Fair Value Measured on Recurring Basis (Details) - Recurring Basis - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Financial assets carried at fair value | $ 0 | $ 0 |
Financial liabilities carried at fair value | $ 0 | $ 0 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) $ in Thousands | Dec. 01, 2017 | Apr. 03, 2017 | Jun. 30, 2018 | Jul. 01, 2017 |
Business Acquisition [Line Items] | ||||
Acquisition of Business, Net of Cash Acquired | $ 0 | $ 10,223 | ||
Custom Control Concepts LLC | Astronics Custom Control Concepts Inc. | ||||
Business Acquisition [Line Items] | ||||
Acquisition of Business, Net of Cash Acquired | $ 10,200 | |||
Cash acquired | $ 500 | |||
Period goodwill and purchased intangible assets are expected to be deductible for tax purposes | 15 years | |||
Telefonix, Incorporated | Astronics Custom Control Concepts Inc. | ||||
Business Acquisition [Line Items] | ||||
Acquisition of Business, Net of Cash Acquired | $ 103,800 | |||
Cash acquired | $ 200 | |||
Period goodwill and purchased intangible assets are expected to be deductible for tax purposes | 15 years |
Acquisitions - CSC Pro-forma Su
Acquisitions - CSC Pro-forma Summary (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Business Acquisition [Line Items] | ||||
Revenues | $ 208,606 | $ 151,114 | $ 387,665 | $ 303,510 |
Net Income | $ 14,025 | $ 7,685 | $ 17,319 | $ 19,272 |
Basic (in usd per share) | $ 0.50 | $ 0.27 | $ 0.62 | $ 0.66 |
Diluted (in usd per share) | $ 0.49 | $ 0.26 | $ 0.60 | $ 0.64 |
Pro Forma | ||||
Business Acquisition [Line Items] | ||||
Revenues | $ 168,565 | $ 333,169 | ||
Net Income | $ 7,880 | $ 18,232 | ||
Basic (in usd per share) | $ 0.27 | $ 0.63 | ||
Diluted (in usd per share) | $ 0.26 | $ 0.61 |